Look whats back; Here we go again?

Question

https://www.housingwire.com/articles/43218-freddie...

Getting awfully close to "subprime" practices from days of yore.

Here we go again?

Bill F. · Answer

@Jason Johnson, not at all. You're seeing ghosts.

The original article said the HomeOne loans had to be underwritten through its Loan Product Advisor. Here are the document requirements. 14 pages for income documentation alone.

Even if it was to the "glory days of sub prime loans" who cares? Subprime loans didn't cause the financial crisis of 2008 alone. The loans getting bundled into MBS, then split up, tranched, miss rated and then advertised as AAA when they were primary were BB and below was far more dangerous. That also doesn't even touch on the role of options in the whole show.

Ed L. · Answer

To me this just looks like pumping the market..

If they want RE to keep going up they need to get more money flowing into it..

After the crash they let the prime money pump it, when that runs out they let the average money pump it, when that runs out they let the subprime money pump it..

If you are a prime borrower, great, you get to buy the dip right away.. Average and you still get to catch a decent ride up..

Now the subprime ha, they run out of prime and average money to pump the market with so they finally let the poor people's subprime money in, pump it some more..

This works out good for most of them because the prime/rich "investor" people get to make all the money in the market, and they finally let the poor people in to buy the tippity top, so the poor subprime people take the brunt of the next crash as they just bought the top..

Your prime dip buy is still probably going to be in the green but these poor people buying the top will owe twice as much as their house is worth..

Keep the rich getting richer, the poor getting poorer, and the American market pumped..

The more I look into the credit system the more it becomes clear, it's ALL about pumping the markets, and the normies eat it right up..

Credit cards to get people to spend as much as possible on china plastic to pump the consumerism market..

Auto loans to pump the auto industry..

Real estate loans to pump the real estate industry..

All pumped by money that people don't have, created out of thin air by the fiat currency system..

I expect my assets to perform with a negative correlation to major world markets so if a dip comes I'll be prepared to buy, have cash, and have a heck of a credit score by then to boot..

I doubt I will be buying anything until then unless it's more of a private deal until refi with a good value add..

I really want to but a house ASAP because I feel like I'm just loosing money.. The rent I could collect on my current house would about cover the mortgage on the new house, but nothing seems right..

Alexander Felice · Answer

This is an expansion of a product already available and the expansion is designed to compete with other lenders who have the same product ALREADY in place in those areas. also as @Bill F. mentioned the GFC wasn't because subprime as much because a supercharged derivative market that attached itself to it.

anything can be a doomsday predictor if you want it to be, which this forum loves to do 2-3 times a week

#theskyisnotfalling

Thomas S. · Answer

The writing has been on the wall for some time now. All we are waiting for is a new trigger to set it in motion. The trigger is different every time but it is going to happen problem is we can not predict what the trigger will be so have no idea when it will happen.

Everything is now in place for a collapse to occur it's simply a matter of time.

Bill F. · Answer

@Jason Johnson subprime (really non prime now) never went away. By having a category of "prime" mortgages, axiomatically you have to have something that is "not prime".

There is a lot more that goes into underwriting a loan besides down payment and credit score. Documentation being a perfect example. Look at the section here about relaxed lending standards. Fannie raised DTI ratio  and investors didn't want to buy the stuff so they had to change.

The larger issue is that the US government will now make profit off of more people.

Connie Miles · Answer

Can someone supply the name of a lender that provides HomeOne Loan? Thanks.

David J. · Answer

@Thomas S. I agree with you. As the market creeps upward, lending practices have to loosen to keep the inventory moving but nothing can go up perpetually.  I know it, but I am still buying property. Like you said we don't know when. My strategy is to make sure I have enough equity and cash flow to survive. Assuming the correction isn't monumental.

David J. · Answer

@Bill F.  From what I understand, this new Home-One program (as recent as last Thursday) has inched the bar down even more. I am not sure how much documentation is even needed. From what I can tell it's very close to the glory days of zero standards. Have we learned nothing from 2008? Buckle up this ride could be taking off for another round!

Look whats back; Here we go again?

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